VAT debate offers more proof that in politics especially, words matter!

Last Thursday, fresh off Tuesday’s unanimous House support of the amendments to the VAT Act, the opposition party convened a press conference that featured its leader Philip J Pierre with newly installed first deputy Ernest Hilaire at his right hand as he read a speech about “the so-called DSH Project”. The address contained not a word to explain why at the latest sitting of parliament the House had unanimously voted to amend the law in the interests of previously disadvantaged printers/manufacturers.   

The amendment of the VAT Act’s First Schedule allowed for educational supplies, such as newspapers, trade catalogues and advertising matter, magazines and books and patterns and samples with no commercial value, to be treated as exempt supplies, as under the Second Schedule of the VAT Act. It was an amendment local manufacturers had been looking forward to since the passing of the VAT Act in 2012—described as “oppressive, anti-poor, anti-worker” by Kenny Anthony in opposition.   

At last Thursday’s press conference Pierre acknowledged without explanation that “we supported the VAT amendment. I supported it, Dr. Hilaire supported it, all of us supported it”. If by “all of us” he included Kenny Anthony, that remained conjectural. Anthony was not present to say yea or nay when the amendment came before the most recent House session. What Pierre considered more to the point was why the government had not eliminated the VAT altogether “as promised” during the 2016 election campaign. That was not quite what Allen Chastanet and his UWP team had promised, but never mind.  

On the other hand, despite that he had indeed supported the VAT amendment in the House two days before his party’s press conference, Hilaire still maintained certain misgivings: “Is this amendment benefitting a particular person? The claim is: ‘Relief for the manufacturing sector!’ Can you really say that that amendment is relief in totality for the manufacturing sector, or is there a certain element in the manufacturing sector that will benefit from it?”

The following might help put to rest Hilaire’s expressed concerns: “The Executive and Members of the St. Lucia Manufacturers Association would like to commend the Government of Saint Lucia, in working with the business sector, for assisting the sector in reducing their operating costs with the new amendment to the VAT legislation.”

What’s especially interesting about the unanimous support for the VAT amendment is that it amounts to the opposition acknowledging that the VAT Act that became law under the leadership of Kenny Anthony was flawed. At Pierre’s press conference, he said what he had chosen not to say during last week’s debate: “I think we have to look at this whole VAT construct and see why it was done and how it was done. VAT is a transactions tax. Now, what happens is that when you have too many . . .”

He abruptly changed direction. “Let’s go back,” he went on. “When you tweak it too much and you do for this but not for that, it creates a distortion and that is why the VAT was done in that way. Because anytime you want to change, you have to come to parliament, etc. So the VAT is normally charged in all transactions. But you’re right; there are certain sectors that are disadvantaged, basically because of a cash-flow problem and because people did not pay their bills on time. As time goes on, you can modify it and you can amend it.” 

It takes a special effort but, having brushed aside the fluff, the discerning reader will recognize that Pierre merely expressed the current government’s sentiments: that VAT, as initially passed in 2012, placed manufacturers at a disadvantage. Indeed, the reader might well ask, “Why all the camouflage?” At last week’s debate Guy Joseph offered an explanation: “Y’all afraid of Kenny!”

This was Hilaire at last week’s press conference, yet again supporting the amendment, albeit with words carefully chosen so as not to step on particularly sensitive toes: “We implement a tax, assess it after a period and make the necessary modifications. We shouldn’t be afraid to say, ‘Yes, we’ve had to change this,’ or ‘Maybe this was not done in the best way possible and we’ve had to modify it.’ You have to be honest and realistic. If we are saying we have to be open and transparent with the public, we have to learn to say yes, that with experience and hindsight maybe it could have been done differently. Maybe certain concessions could have been made in a different way. There’s nothing wrong with that.”